Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><em><strong>*</strong></em><em><strong>Improved Operating Result:</strong></em> Bank Central Asia (BBCA.IJ) [BCA] reported 1Q21 results of IDR 7.0 tn do not do BCA justice, as core operating results grew IDR 1.5 tn (40.9%) over the same period. BCA’s positive operating results were highlighted by two factors: a) interest income growth of IDR 385 mn (2.8%) due largely to a bit of leverage in the corporate securities portfolio, and b) a tax rate reduction; and</p><p><em><strong>*Credit Challenge</strong></em><em><strong>s Persist</strong></em><em><strong>, But </strong></em><em><strong>Credit Break Decelerates: </strong></em>By our calculation, we find that 1Q20 net new NPLs amounted to IDR 742 bn for annualized rate of increase of 28.7% - which is quite favorable compared to 4Q20 results of IDR 1.3 tn and 46.5%. Given the surprise deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio.</p>

*Improved Operating Result: Bank Central Asia (BBCA.IJ) [BCA] reported 1Q21 results of IDR 7.0 tn do not do BCA justice, as core operating results grew IDR 1.5 tn (40.9%) over the same period. BCA’s positive operating results were highlighted by two factors: a) interest income growth of IDR 385 mn (2.8%) due largely to a bit of leverage in the corporate securities portfolio, and b) a tax rate reduction; and*Credit Challenges Persist, But Credit Break Decelerates: By our calculation, we find that 1Q20 net new NPLs amounted to IDR 742 bn for annualized rate of increase of 28.7% - which is quite favorable compared to 4Q20 results of IDR 1.3 tn and 46.5%. Given the surprise deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio.

Bank Central Asia – Light At The End Of The Tunnel

Bank Negara Indonesia Persero / Equity Bottom-Up

<p><em><strong>*Capital Raise Coming:</strong></em>Without any detail whatsoever, on March 10, 2021, the Ministry of State-Owned Enterprises (MOSOE) announced that Bank Negara Indonesia (BBNI.IJ) [BBNI] will seek a rights offering sometime in 2022; and</p><p><em><strong>*Big Dilution Expected Given Awful Credit Metrics:</strong></em>BBNI’s stated capital levels are low by sector comparison at a 16.8% CAR. Net new NPLs have increased 206.0% on an annualized basis – the absolute worst we have witnessed regionally this quarter. We calculate a minimum loss reserve shortfall of IDR 29.7 tn which represents 28% of stated capital – intimating a significant capital is on the horizon. </p>

*Capital Raise Coming:Without any detail whatsoever, on March 10, 2021, the Ministry of State-Owned Enterprises (MOSOE) announced that Bank Negara Indonesia (BBNI.IJ) [BBNI] will seek a rights offering sometime in 2022; and*Big Dilution Expected Given Awful Credit Metrics:BBNI’s stated capital levels are low by sector comparison at a 16.8% CAR. Net new NPLs have increased 206.0% on an annualized basis – the absolute worst we have witnessed regionally this quarter. We calculate a minimum loss reserve shortfall of IDR 29.7 tn which represents 28% of stated capital – intimating a significant capital is on the horizon. 

Bank Negara Indonesia – MOSOE Tosses A Grenade

Bank Tabungan Negara Persero / Equity Bottom-Up

<p><strong><em>*Good Number: </em></strong>Bank Tabungan Negara (BBTN.IJ) [BBTN] reported 4Q20 bottom-line result of IDR 482 bn, increasing IDR 130 bn (36.9%) linked quarter. On an operating basis excluding gains (assumed in 4Q20), we calculate results improved even further – increasing IDR 98 bn or 47.3% linked quarter; and</p><p><strong><em>*Credit Outlook Brightens:</em></strong> We were also quite pleased to see that net new NPLs too have decelerated and now amount to IDR 240 bn or just 8.2% on an annualized basis. Given the deceleration of net new NPLs, mix of loans, and the strong reserve cover, BBTN’s reserves appear to right where they need to be. </p>

*Good Number: Bank Tabungan Negara (BBTN.IJ) [BBTN] reported 4Q20 bottom-line result of IDR 482 bn, increasing IDR 130 bn (36.9%) linked quarter. On an operating basis excluding gains (assumed in 4Q20), we calculate results improved even further – increasing IDR 98 bn or 47.3% linked quarter; and*Credit Outlook Brightens: We were also quite pleased to see that net new NPLs too have decelerated and now amount to IDR 240 bn or just 8.2% on an annualized basis. Given the deceleration of net new NPLs, mix of loans, and the strong reserve cover, BBTN’s reserves appear to right where they need to be. 

<p><strong><em>*Weak 4Q20:</em></strong> Bank Central Asia (BBCA.IJ) [BCA] reported 4Q20 results of IDR 7.1 tn, declining IDR 699 bn (9.0%) on a linked quarter basis. Worse yet, when we exclude various non-core items, core operating results declined IDR 4.6 bn (55.5%) over the same period. Results at BCA were highlighted by negative operating jaws; and  </p><p><strong><em>*Credit Challenge, But Modest Earnings Event: </em></strong>By our calculation, we find that 4Q20 net new NPLs amounted to IDR 1.3 tn for an annualized rate of increase of 46.5% - rivaling some of the worst Indian banks. Given the continued breakdown in credit quality which shows no signs of abating, we calculate that reserves are short close to IDR 3.5 tn or about 50% of 4Q20 PBT – which is de minimis relative to the sector and region. </p>

*Weak 4Q20: Bank Central Asia (BBCA.IJ) [BCA] reported 4Q20 results of IDR 7.1 tn, declining IDR 699 bn (9.0%) on a linked quarter basis. Worse yet, when we exclude various non-core items, core operating results declined IDR 4.6 bn (55.5%) over the same period. Results at BCA were highlighted by negative operating jaws; and  *Credit Challenge, But Modest Earnings Event: By our calculation, we find that 4Q20 net new NPLs amounted to IDR 1.3 tn for an annualized rate of increase of 46.5% - rivaling some of the worst Indian banks. Given the continued breakdown in credit quality which shows no signs of abating, we calculate that reserves are short close to IDR 3.5 tn or about 50% of 4Q20 PBT – which is de minimis relative to the sector and region. 

Bank Central Asia – Poor Showing At Indo Bellweather

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

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<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has bought a further 18% stake in Indonesia's <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).</p>
<p>Gojek's Indonesia users will in the future be able to open a bank account with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> and manage their finances through the <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> App. </p>
<p>The <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> deal marks an opportunity for <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US)</a>, which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors</p>
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<div>For <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ</a>, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.</div>
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<div>The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which seems increasingly unlikely. </div>
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<p>Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> also recently received US$150m in new money from <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ),</a> which represented another heavyweight local shareholder on top of <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> and Djarum Group. </p>
<p>We look at the background of the <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> management team below the fold, which seems well-suited to building this future collaboration.</p>
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Gojek (1379371D IJ) has bought a further 18% stake in Indonesia's Bank Jago (ARTO IJ) bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.
Bank Jago (ARTO IJ) has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).
Gojek's Indonesia users will in the future be able to open a bank account with Bank Jago (ARTO IJ) and manage their finances through the Gojek (1379371D IJ) App. 
The Bank Jago (ARTO IJ) deal marks an opportunity for Gojek (1379371D IJ) to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.
Bank Jago (ARTO IJ) has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from Facebook Inc A (FB US) and Paypal Holdings (PYPL US), which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors

For Gojek (1379371D IJ, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.

The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with Grab (0967655D SP), which seems increasingly unlikely. 



Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. Gojek (1379371D IJ) also recently received US$150m in new money from Telekomunikasi Indonesia (TLKM IJ), which represented another heavyweight local shareholder on top of Astra International (ASII IJ) and Djarum Group. 
We look at the background of the Bank Jago (ARTO IJ) management team below the fold, which seems well-suited to building this future collaboration.











































Gojek (1379371D IJ) - Upping the Ante on Financial Services

Indonesia

Bank Danamon Indonesia Tbk PT provides general banking services. The Bank's head office is located in Jakarta with branch offices throughout Indonesia.

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Bank Danamon Indonesia (BDMN IJ)

Bank Central Asia – Light At The End Of The Tunnel

BANK CENTRAL ASIA: BCA's core operating results grew 40.9% QOQ in 1Q21, and were highlighted by interest income growth and lower taxes. Another...

Thomas J. Monaco

Bank Negara Indonesia – MOSOE Tosses A Grenade

Bank Negara Indonesia: Without any detail the MOSOE announced that BBNI will seek a rights offering in 2022. We calculate a minimum loss reserve...

Thomas J. Monaco

Bank Tabungan Negara – Well Managed

BANK TABUNGAN NEGARA: BBTN reported 4Q20 bottom-line result which increased 36.9% linked quarter. Net new NPLs too have decelerated at just 8.2% on...

Thomas J. Monaco

Bank Central Asia – Poor Showing At Indo Bellweather

BANK CENTRAL ASIA: BBCA reported 4Q20 results decline of 9.0% linked quarter. Results at BCA were highlighted by negative operating jaws. Net new...

Thomas J. Monaco

Gojek (1379371D IJ) - Upping the Ante on Financial Services

Gojek's recent move to increase its stake in Bank Jago to 22% signals it intends to move into providing a broader range of financial services.

Angus Mackintosh

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